04/10/2010 (Business Times) - The average price of Malaysia's crude palm oil (CPO) is projected to stay above RM2,600 a tonne for the rest of this year, supported by a firm crude oil price.

Chief executive officer of Malaysian Palm Oil Council (MPOC), Tan Sri Dr Yusof Basiron, said the CPO price would also remain firm going into the first quarter of 2011 if the projected lower soyabean output in South America materialised.

"To exceed RM2,600 is not an issue because the CPO was traded at RM2,700 and above in the last few months," he told Bernama on the sidelines of the International Palm Oil Trade Fair and Seminar 2010 here today.

Yusof said CPO output in both Malaysia and Indonesia in 2011 would increase substantially on the delay effects of this year's El Nino and La Nina.

Earlier, when presenting his paper on "Glimpses of 2011 -- Pointers for Global Oils and Fats Trade", Yusof said production of oil and fats grew at a slower pace vis-a-vis consumption.

"This tightness has so far been the major factor behind the strong vegetable oil prices, including palm oil.

"For example, the average CPO price was RM2,559 for January to August, while that for 2009 was RM2,244," he said. He said Malaysia and Indonesia would the main sources of supply for next year.

Yusof said the CPO price has the potential for upside as the South American soyabean production in 2011 would be the key determining factor.

"At this point of time, projected lower soyabean production may further deteriorate as the dry spell remains a teething factor for the output," he said.

He said the increase in the soyabean oil applications for biodiesel production in South America was expected to reduce the availability of soyabean oil traded globally.